2014 maryland legislative and case law update presentation

2014 Maryland Legislative and Case Law

Update

Spring 2014

Jason Fisher, EsquireRuth Katz, Esquire

Lerch, Early & Brewer, Chtd.

www.lerchearly.com

© Lerch, Early & Brewer, Chtd. 2014 www.lerchearly.com

Introductions 2014 Legislative Update 2013-2014 Current Case Law

Update

Overview

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Speakers

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Jason Fisher is an attorney at Lerch, Early & Brewer who co-chairs the firm's practice focused exclusively on community associations. He provides skilled representation to community and homeowners associations, condominiums and co-operatives in Maryland and the District of Columbia, and is recognized as a leader in the community associations field.

Ruth Katz is an attorney at Lerch Early & Brewer. Ruth is primarily focused on litigation issues faced by homeowners associations, condominiums and cooperatives. She is active in WMCCAI and serves as co-chair of CAI’s Maryland Legislative Committee.

301-657-0743 [email protected]

[email protected]


Notable Failed Bills

Manager Licensing – withdrawn by sponsor

Resale Package Fee Cap Different bills passed House and Senate Died in Conference Committee

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HB 73 – Injury Caused by Dog

Liability of the Dog Owner If a dog causes injury, it is presumed that an

owner knew, or had reason to know, that the dog had dangerous or vicious tendencies, and the owner of the dog is therefore liable for damages caused by the dog.

With limited exceptions, the owner of a dog is liable if the dog was running at large.

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HB 73 – Injury Caused By Dog Cont. Liability of condominium, homeowner and

cooperative associations. In an action against a person other than the owner of

a dog, liability reverts to pre-Tra c e y v. So le s ky – meaning that in order to be held liable it has to be shown that the association knew, or had reason to know, of the dog’s dangerous tendencies.

One Bite Rule. Impact on current rules/policies.

This is emergency legislation. It takes effect as soon as it is signed by the governor (in June). 6


Injury Caused By Dog Cont.

Other notable dog related bill is HB 422. HB422 states that a county or municipality may not adopt breed-specific laws or ordinances. (Only affects laws or ordinances adopted after Oct. 2014.)

THIS BILL DOES NOT APPLY TO ANYONE

OTHER THAN MUNICIPALITIES OR COUNTIES.

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HB 602 – Foreclosure on Lien

A common ownership community may foreclose only on a lien that consists solely of: Period (annual) assessments Special assessments Interest Reasonable costs and attorneys’ fees directly related to the

filing of the lien that do not exceed the amount of delinquent assessments (excluding interest).

The lien being foreclosed upon may not consist of any late fees, fines, attorneys’ fees relating to fines, or other collection fees.

Lerch Early’s approach.8


SB 865 Maryland Cooperative – Transparency and Members Rights

Meetings – similar to condominium Must be open to members and agents Closed sessions of the board

Discussion of employees/personnel Protecting the privacy and reputation of individuals in matters

not related to the cooperative’s business Consultation with staff personnel, consultants, attorneys,

board members and other persons in connection with pending or potential litigation or other legal matters

Considering the terms or conditions of a business transaction in the negotiation stage of the disclosure could adversely affect the economic interest of the cooperative

Closes Sessions

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Cooperative cont.

Conducting investigative proceeding possible or actual criminal misconduct

Complying with a specific constitutional, statutory, or judicially imposed requirement protecting particular proceedings or matters from public disclosure

Discussion of owner assessment account Notice of all regular meetings must be provided to the

owners Depository created as of January 1, 2016

Public offering statement and proprietary lease (not rules)

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Cooperative Cont.

Late Charge – proprietary lease or bylaws may provide for a late charge of no more than $15 or one-tenth of the total amount of any delinquency

Dispute Resolution (Similar to Maryland Condominium Act) May not impose a fine, suspend voting, bring an action to evict or

infringe on any other rights of a member for a violation of the rules or propriety lease unless: 10-day cease and desist Notice of hearing – at least 10 days in advance of the hearing If court action is required, prevailing party is entitled to its attorneys’

fees

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Cooperative Cont.

Eviction for non-payment Delinquent for 3 months Must go through the dispute resolution

process

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2013-2014 Case Law Update

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He nry v. Be l Pre As s o c ia tio n, Inc .

Court of Special Appeals, No. 2325, filed Jan 10, 2014

Issue: Whether a HOA acted in bad faith when it voted not to take enforcement action on a property owner’s covenant violation when the deciding vote was from a board member that had an identical violation on his property.

Holding: The court reaffirmed the business judgment rule (absent fraud or bad faith, a court will not interfere with a discretionary decision) and stated that in this case the board’s decision not to enforce against an owner did not personally benefit or harm the other violating board member.

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He nry v. Be l Pre As s o c ia tio n, Inc .Court of Special Appeals, No. 2325, filed Jan 10, 2014

Bad faith is defined as not acting in good faith. Good faith is: The absence of a desire to obtain

personal benefit for some person other than the corporation.

Not approving an action that a director knows is in violation of the law.

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Schum a n v. G re e nbe lt Ho m e s , Inc .

69 A.3d 512 (2013), Court of Special Appeals

Issue: Is a co-op liable for failing to prevent an occupant from smoking despite receiving complaints of secondhand smoke?

Holding: Co-op found not liable for failing to prevent secondhand smoke exposure.

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Schuman v. Greenbelt Homes, Inc.

69 A.3d 512 (2013), Court of Special Appeals

Smoking is not a nuisance p e r s e – in essence, smoking in and of itself, without additional facts surrounding the specifics of the smoking, does not create a nuisance. Each case is therefore fact specific.

The court held that in this case the facts did not rise to the level of substantially and unreasonably interfering with another’s use and enjoyment of their property.

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For more information

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Lerch, Early & Brewer, Chtd.3 Bethesda Metro Center, Suite 460

Bethesda, MD 20814(301) 986-1300

www.lerchearly.com

Tha nk y o u fo r y o ur p a rtic ip a tio n.